House Hack #3 2021!

[Ryan Thomson]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Colorado Springs.

Purchase price: $450,000
Cash invested: $66,000

I was getting serious with my girlfriend and we wanted to live together, but without roommates. For someone who wants their house to be an asset this is hard to do unless you can have a second unit. Kicking my tenants out would have been a terrible opportunity cost and renting would have actually been a better financial option. I used my rental income from the other two house hacks to zero out my mortgage debt. Then used my w-2 income to qualify for a legal nonconforming duplex.

What made you interested in investing in this type of deal?

It was a duplex that would allow me to have my own space AND a completely separate rental unit to pay the mortgage.

How did you find this deal and how did you negotiate it?

This was on the MLS. There was several things wrong with the property and I love to negotiate so I got an 8k credit to use towards electrical work and closing costs.

How did you finance this deal?

I used a conventional loan with 15% down.

What was the outcome?

Turned the basement into a STR. I live for free and cashflow $859/month.

Lessons learned? Challenges?

I learned that appraisers and lenders make mistakes. A lender seeing the appraisal wrong almost cost me the loan. I learned a ton about working with the city zoning department and the public library to get phone book records from the 50s to prove that it was built as a duplex. Yes, you read that right! I had to get the library and old phone records to qualify for this loan.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with myself as the agent on this deal. I worked like crazy to make this deal work.